DEFINITION AND NATURE OF CONTRACT

Introduction

       A vital element impacting business transaction and decision is business regulatory framework. Different laws and regulations govern specific aspects of many vital decision taken by business enterprises. The legal framework within which different firms have to operate are largely governed by General Laws applicable o all forms of organisations - irrespective of their size and ownership. These laws fall into the category of mercantile laws.

Definitions

      "a rule of conduct imposed and enforced by the sovereign."                     -Austin

     "Law is the body of principal recognised and applied by the state in the administrative of justice."                                                                                                 - Salmond

Law of contract

      Law of contract is the most important and basic part of Mercantile law. It is the foundation for many other laws falling in the category of Mercantile laws.   It is not only the mercantile or trader but every person who lives in the organised society, consciously or unconsciously enters into contract from sunrise to sunset. When a person buy a computer or hires a taxi, or goes to video library to buy a video cassette or takes a credit card from a bank or gives loan to another, or he does booking for an orchestra/DJ for marriage party, he enters into and performs contract through he may be unaware of this fact. Such contracts create legal relations giving rise to certain rights and obligations.

     The law of contract is mainly concerned with three questions :

1. Is there an agreement ?
2. Can the parties to such agreement enforce it in a court of law ?
3. How they can enforce it ?